The stock market spent a difficult time after announcing the tariff on April 2. The S&P 500 index fell to more than 4.5 % for successive days, including stumbling nearly 6 % on April 4. Nasdaq fell about 6 % last Thursday and Friday.
The stock market’s reaction to president Trump’s announcement on “Tahrir Day” was a tariff higher than expected. Supporters argue that high customs tariffs are the best tactic to make companies prevent American manufacturing activity. The opponents argue that the customs tariff will cause inflation and send the American economy to a tail.
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The S&P 500 decrease after the high definitions of Qoban, including a 54 % huge tariff on China’s imports, reflects the greatest risks that corporate sales and profit growth will shrink this year, which risk stagnation or, worse, explicit stagnation.
These are real risks facing stocks and economics and should not be ignored.
However, the shares do not rise or fall into a straight line, and the escalating evidence indicates that the S&P can prepare for a short -term height after a particularly rare signal flashing on Friday.
The sale of the S&P 500 has led to the rare Overgrof signal. Santiago & Sol; Getty Images
Rip Robarking S&P 500 raised more than 20 % in consecutive years in 2023 and 2024, including 24 % health increase last year.
The assembly was built on optimism that the Federal Reserve will dominate the cuts in interest rates amid low inflation, which leads to its position on the monetary policy hawks since its war against inflation began in 2022.
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Also, investors are equipped due to a flood of spending on artificial intelligence as companies raced to develop their chat keys of artificial intelligence and AI applications.
Unfortunately, these bullish arguments look like this year.
After reducing interest rates in September, November, and December, the Federal Reserve stopped additional interest rates because inflation rose. In February, the consumer price index showed inflation by 2.8 %, an increase of 2.4 % of last fall.
The pause of some excitement removed that the low prices would increase business investment and reduce interest expenses on variable debts- bad news for corporate sales and profit growth, which is the lifeline for high stock prices.
The growth of artificial intelligence can be its peak. In January, the Chinese Deepseek-R1 was shocked, a competitor to Openai’s Chatgpt and Google’s Gemini, everyone when it was detected that it was developed for only $ 6 million using the cheapest semiconductor chips, instead of the latest graphic processing units in NVIDIA (GPUS).
AI this year is expected to grow, but this may change if macro fears cause the largest tunnels, including Amazon and Google, to decrease data center plans. Reports have already appeared that Microsoft is re -evaluating its construction.
It has begun to spend the federal and AI reserves for anxiety that has already begun to influence the S&P 500 index before the Tahrir Day announced in Trump, and a lot of Tinder has provided a sale that may illuminate the higher definitions.
The good news is that the last s & P 500 has sparked some excess of its evaluation. The measurement index is now traded to the profit rate of 19.4, according to FactSet. This puts it less than the average P/E 5 years old and closer to an average of 10 years of 18.3. It was 22.2 in February.
Although the S&P 500 is still cheap, in the end in the range of at least 18-20, historically, it shows flat returns for one year instead of losses next year.
S&P 500 P/E has decreased dramatically since mid -February 2025.Lon Coperman & Sol; Doug Kass & Pase;
The speed and depth of the sales process sparked a list of feelings indicators to show that the S&P 500 is OVERS.
The CNN’s fear/greed index is recorded. At the same time, the American Association to take advantage of the individual investors witnessed the forecast for decline during the next six months to 61.9 %, which is the third highest in reading and the highest reading since the stock market in March 2009 during the great financial crisis.
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Many other measures have also increased to levels consistent with short -term relief marches. The volatile index, or Vix, increased above 50 of nearly 20 before announcing the customs tariff. Also, the CBOE mode/recall ratio, which was placed in the activity of the oud call option, increased to 1.2, in the vicinity of the levels of fear coinciding with a gathering.
These measures already indicate that the S&P 500 may find its foot, at least in the short term, but another rare sign, the RSI (14) less than 30, is also bullish.
RSI (14) measures price procedures over the previous 14 trading periods and can indicate when stocks become more than a peak and increase. RSI is higher than 70 on S&P 500 Signature Buyers. However, reading below 30 indicates that the sale may be exaggerated.
On April 4, RSI on SPDR S & P 500 ETF Trust ((spy)) He decreased to about 23, and remained there on April 7.
For perspective, this is less than 28 registered near its lowest level in October 2023 and read 27 registered near its lowest levels in September 2022. It also has the lowest self-conference indicators because it recorded less than 20 near Covid-Lows in early 2020.
Of course, there is nothing guaranteed, and stocks can always fall further than anyone expects. They can remain in the sale stage for a period of time and become more excessive. John Mainard Keynes also wrote, “The markets can remain more irrational than you can remain a solvent.”
However, the low RSI reading may indicate that the S&P 500 bounces in the short term. In the medieval or long -term term, it is possible that it depends on whether the high definitions are enlarged fuel, causing consumers and companies on their wallets, which leads to recession or stagnation.
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